Petrobras Hit with $358 Million Quarterly Loss

As he begins his first day as Brazilian acting president, Michel Temer, will have to face numerous political and economic challenges in the 180 days when he replaces suspended leader President Dilma Rousseff. Recession, growing unemployment, rising inflation are some of the obstacles in front of him though one more can be added today.

The state-run oil giant posted a $358 million net loss in the first three months of 2016, which comes one year after it earned some $1.5 billion in quarterly profits. Analysts surveyed by Reuters anticipated over $1 billion in earnings during the first trimester this year but ultimately the company sunk to a third consecutive quarter in the red. 

Petrobras also reported in its securities filing that net revenue dropped by 5.4% to nearly $20.2 billion, while the EBITDA margin that helps measure operating profit, dipped 2% to around $6 billion.

Much like other oil firms around the world, Petrobras has been hurt by the low prices of crude in recent months. But the company has also been hit by decreased oil and natural gas production purportedly stemming from increased maintenance at promising offshore sites. The refinery division that had helped Petrobras gain profits over a year ago has stagnated amid declining demand.

On the political side of the equation, Petrobras is the key business entity in the middle of the “Lava Jato” corruption scandal where an estimated $5.3 billion in bribes and kickbacks exchanged hands. Though the impeachment charges against Rousseff are not linked to “Lava Jato”, many figures of Brazil’s political elite have been implicated including ally-turned-adversary Temer:

Temer and his cabinet are also tainted by corruption allegations. The interim president himself faces an impeachment challenge and has been barred from standing for office for eight years due to election violations. He has also been named in two plea bargains in the ongoing Lava Jato investigation into the kickback and bribery scandal at the state-run oil firm Petrobras.

Half a dozen other members of his proposed cabinet, including new planning secretary Romero Jucá, also face charges by Lava Jato prosecutors.
 

Despite these problems Temer said he had “absolute confidence” in his ability to turn things around with the help of the population.

During his first speech as Rousseff’s temporary successor, Temer pledged his support behind the “Lava Jato” probe and vowed to take concrete steps against corruption. In an odd twist, Temer may himself be impeached over his Petrobras ties and there is a process pending against him. Attorney General Rodrigo Janot last Monday issued a statement to the Supreme Court alleging that Temer can be impeached yet the injunction against him is excessive. Janot, in fact, implied that he agrees with one of the main criticism of the case against Rousseff in that both she and Temer should have undergone the impeachment process at the same time.

YouTube Source – AFP
 
Online Sources (English) – Vox, Reuters, Bloomberg, The Guardian
 
Online Sources (Portuguese) – Reporter Diario 
 
Online Sources (Spanish) – Voz de America